Risky business: Why staying put isn’t as safe for your career as you might think
Recently I had lunch with someone who is trying to figure out his next career move. Let’s call him Sam. Sam started his career in management consulting and has worked as an independent contributor at a Fortune 200 corporation for three years. Over the past several months he has done extensive research and landed on a target industry and role type, and he excitedly told me about the company at the top of his interest list. This company currently has an open position that seems to be a good match for his experience and future goals. He’d already spoken with someone relatively senior within the organization but had yet to formally throw his hat in the ring. Why the hesitation? Sam had discussed the prospect with a mentor, who’d written off the opportunity because “going to a start-up is too risky.” He now wanted to know: what did I think?
Given the situation, Sam’s mentor provided terrible advice. “But isn’t going to a start-up riskier than staying at a Fortune 200 company? Isn’t it safer to follow a well-defined career path up the management ranks?” In Sam’s case, these heuristics are wrong; staying at his current job holds far greater risk. And once I’ve introduced a framework for thinking about and evaluating career risk, we’ll return to Sam’s situation and walk through why that’s the case.
Frankly, I shouldn’t have been surprised to hear the advice Sam received. Many people are not so great at assessing risk, particularly when they don’t take the time to do so systematically or use faulty assumptions in their evaluation. And this failure can have serious, long-term consequences on the career front. But that doesn't have to be your story. If you’re able to recognize the benefits and risks inherent to your present job situation both now and over time, you can make a proactive, informed decision about whether to stay in your current role or seek one with a more desirable risk/reward profile.
So what is risk, and how does one quantify it? While the word is used differently in other contexts, for our purposes the most accurate definition of risk is the probability or threat of damage, loss, opportunity cost, or any other negative occurrence that may be avoided through preemptive action. While it is difficult to quantify risk in the traditional sense of converting qualities to numbers, the concept of a risk “equation” is actually quite useful.
There are three variables that matter when making a go/no-go career decision based on risk: risk, reward, and risk tolerance.
Career Risk: Risks introduced by your current role, which have the ability to impact your entire career trajectory
Career Reward: The blend of role progression, growth, compensation, enjoyment, fulfillment, and other valued attributes that you desire in your career, in a ratio that reflects your specific goals and priorities
Note: This article does not address the “reward” piece of the equation. If you’re unsure of what you want your career to look like or would like support in systematically identifying what matters to you most and then building a career that aligns with your values, I’m happy to help.
Career Risk Tolerance: The level of career risk you’re currently comfortable with (without impacting your ability to sleep at night)
These variables are very much interrelated, as the following equation shows:
Career Risk / Career Reward ≦ Career Risk Tolerance
Translated into words, the equation states that the career risk you assume relative to the career reward you’re pursuing (or the risk/reward ratio) should be less than or equal to your current risk tolerance. It reminds us that career risk must be considered within the broader context of our personal career reward. Your appetite for risk — the right side of the equation — will likely vary throughout your career. And while that appetite will dictate the amount of career risk you assume, at different phases of life you’ll also value the security of specific career dimensions more than others. By understanding the specific career risks you’re currently accepting and the level of risk you’re willing to tolerate, you can make an informed decision about whether to stay in your current role or seek out a less risky role that spikes along more desirable dimensions.
The best way to achieve your career goals while maintaining a risk/reward ratio that allows you to sleep at night is by minimizing unnecessary risk. There are five main areas to evaluate as you assess the risk that staying in your current role holds for your career trajectory:
Company health
Experience
Career progression
Enjoyment and fulfillment
Compensation
After reading the below discussions of each area, ask yourself the following questions:
Which of these dimensions are most important to me? Based on my priorities, where do I most value security? If I were to rank each dimension based on my willingness to assume risk, on a scale of 1 (very secure) to 10 (very risky) where would each dimension fall? And when I look at how I’ve ranked all 5 dimensions, am I comfortable with the overall level of risk? Does it feel like I’ve appropriately captured my own risk tolerance or do I need to make some adjustments?
For each dimension, what risks am I assuming in my current employment situation? Does my actual risk level exceed the comfort level I just defined, or is it in line? Conversely, is my current role much “safer” along this dimension than what I desire, and would I prefer to take on additional risk along this particular dimension in order to reduce risk along a dimension where I more highly value security?
Is the risk I’ve assumed for each dimension limited to my present circumstances or likely to impact my future career?
Company health
No matter how great your role or direct team is, if your company is not performing well then it’s important to think about the potential implications should your organization continue to do poorly. When considering company health, you want to evaluate your organization against the metrics that it prioritizes — and, if relevant, that are most important to its shareholders. If you work for a public corporation and aren’t sure what those metrics are, listen to an earnings call; pay attention to what your CEO and CFO report on and emphasize (or try to dodge), as well as to the questions the analysts ask. Watch how the stock moves in response to that call. Then keep paying attention and learning more. If you work for a public company, there is no excuse for not knowing how well it’s doing. Your CEO likely has very clear top line growth and bottom line margin improvement or profitability targets that he or she has shared publicly and for which the corporation is being held accountable by shareholders.
If you work for a private company and aren’t privy to financial reporting or related metrics, it may be slightly more difficult to understand how well the organization is doing, but if you start paying closer attention you should be able to at least get a general sense of whether performance is positive or negative. Is the company investing in itself and its people or tightening its purse strings? Are you observing signs of growth (e.g., increases in order or customer volume, expansions in hiring, entering new markets) or is leadership fighting to keep the business afloat in an increasingly competitive landscape (e.g., dips in order or customer volume, frequent strategy changes, or other acts of desperation)? Form a hypothesis, then listen and ask questions as appropriate to refine your understanding of how your employer is doing. Usually if your company is doing well, leadership will let you know.
In short: If you don’t already have a sense of the general health of your company, climb that learning curve and then stay aware. If your company isn’t doing so well, no matter how great your job or team is it’s important to recognize and compensate for the risk this presents to you and your role. If your organization’s performance goes from bad to worse, you could be laid off or left dealing with the consequences of team members or key internal partners losing their jobs with no replacement. It’s important to be prepared.
Conversely, poor company health often leads to leadership changes or strategic shifts; well-positioned employees who seize the opportunity may be able to fill a void, positively impact the company’s trajectory, and take a massive career leap forward. But these opportunities carry significant potential pitfalls and a low likelihood of success, so it’s important to be honest with yourself about the risks you’re assuming and your own personal risk tolerance.
Poor company health can also amplify some of the other dimensions we will discuss. If your company limps along for years on end — and you stay along for the ride — your career progression, compensation, and enjoyment of your role may be curtailed.
Experience
Experience and career progression, the next dimension we’ll discuss, address the two sides of the same “growth” coin: learning and optics. Your experience risk focuses on the professional development opportunities your role provides. Have your company, team, and job allowed you to continually grow, learn, and tackle new challenges? Or are you stagnating and doing the same types of tasks or projects month after month, without improving your skills or leadership abilities?
In short: Are you learning and growing, or have you gotten everything you can get from your role? If the latter, are there new opportunities you can take on, or is your stagnation truly caused by limitations your organization imposes?
Career Progression
Career progression risk centers on your “career story”: whether your current position affords you opportunities and achievements that future prospective employers will interpret as continued advancement up the leadership and development curve. Has your experience given you great resume bullets? Has it allowed you to demonstrate progressive leadership and other key skills? What are your prospects for a title bump or actual promotion within your group or the broader organization? If you leave now, versus in two years — or five — what will you have to show for the additional time you’ve spent with the company?
In short: If you’re evaluated alongside someone in a similar role at a different company, will your experience compare favorably or will you come up short? And if you’ll come up short, how much of that will be due to the constraints your organization or group has placed on your role?
Enjoyment and Fulfillment
No job is perfect, but as the pursuit to which you dedicate the majority of your waking hours, it should be enjoyable and fulfilling most of the time. If you’re miserable or unfulfilled at work, a lot is at stake. You may feel less motivated to engage with other aspects of your life you used to really enjoy. You might take it out on your family or friends. And you run the risk of burning out and either choosing or being forced to walk away. Enjoyment and fulfillment are hard to benchmark against others; this is the one dimension we’re assessing where looking inward and asking yourself some tough questions is the only “research” or comparison you need to do.
In short: Do you enjoy your job? Is it fulfilling? If you’re satisfied with your role, can you anticipate its expiration date or do you expect that your position will continue to grow with you?
Compensation
If your company pays at or below market, caps promotion-based raises at a percentage of your previous salary, and/or does not provide in-role raises beyond cost of living adjustments, the odds that you’re underpaid compared to industry benchmarks are fairly high, particularly if you’ve been at the company for a while. The best source for benchmarks will vary based on your industry and background; you’ll need to do your research. In some industries, there is really useful reporting — for instance, former strategy consultants can leverage an annual compensation study by Charles Aris. For more standardized role types, websites like GlassDoor can be helpful. If you have friends or colleagues who have recently looked for a job in your field, they may be able to share useful resources. If relevant, make sure to take bonuses and vesting stock grants into account when thinking about how your annual pay stacks up.
Note: There are times when taking a pay cut to gain a particular experience or skill set can be a worthwhile investment in one’s career. If you made such a decision, then recognize that your compensation might not stack up and that this investment is the reason why. It’s important to periodically revisit this decision and ensure that you’re still getting the necessary “return” in other key areas to make the comp hit — and associated longer-term risk — worthwhile.
In short: Based on the information you can find, is your compensation above market, below market, or roughly on par? If you’re earning meaningfully less than you should, or if your pay trajectory within your organization will be relatively flat, recognize that your opportunity cost — the difference between your salary and your peers’ at other companies — will continue to compound over time.
Now what?
Now that we’re armed with a solid framework for evaluating risk, let’s return to Sam’s situation. He’s currently assuming significant risk across all five dimensions:
Company health: Sam’s employer, a struggling public company, has undergone several rounds of restructuring and layoffs in the past year alone in order to eek out returns that won’t tank its stock.
Experience: While Sam’s previous boss prioritized his professional development, his current boss and group leader are not providing him the necessary growth opportunities to keep him from stagnating in his role.
Career progression: There is no clear internal promotion path for Sam (or for the majority of the company’s employees at his level). If he stays in his current role for another year or two, he’ll have a hard time demonstrating career progression in external interviews.
Compensation: Sam’s last two annual “raises” were minor cost of living adjustments, and he is not eligible for a bonus.
Enjoyment and fulfillment: Sam no longer feels particularly fulfilled by his role, which prompted his research discussed at the top of the article.
In contrast, the “start-up” Sam is considering appears to be significantly less risky across the first four dimensions discussed above, based on his research and discussions with employees. It is a well-funded, relatively sizable company with a proven track record and competitive salaries, at least at Sam’s level. The role will offer Sam challenges and growth opportunities he has not previously tackled. Leadership has consistently promoted folks who do well in the role he is considering, giving them opportunities in other parts of the organization. Based on Sam’s interest in the new industry and frustration with his current role, it’s likely to be a safer move on the enjoyment and fulfillment front as well. While there are certainly unknowns about the start-up job, when compared with the demonstrable risks of his current role it’s clear that for Sam it is far riskier to stay in his position at this particular Fortune 200 company than it would be to take the new role he’s eyeing, should he receive an offer.
Now that we’ve figured out what Sam should do, let’s talk about you. Recall the risk/reward ratio and your three variables at play: the risk to both your current role and broader career trajectory, your career goals and priorities (reward), and your personal risk tolerance. Look at your findings across the five dimensions you’ve evaluated: company health, experience, career progression, enjoyment and fulfillment, and compensation. Identify where you’re taking on career risk, and to what extent, versus the categories where your job is bolstering your career trajectory and providing value in the present moment. Based on your personal risk tolerance, determine whether the scale tips favorably towards staying in your current role, or if you should dip a toe — or dive — into a job search. And no matter how rosy your position may look against the metrics I’ve laid out, it’s always prudent to keep your resume and LinkedIn profile relatively up to date, your network engaged, and your pulse on other opportunities in your field or geography, depending on your personal priorities.
Finally, as the discussion of Sam’s contemplated start-up role demonstrates, this risk lens is also useful when evaluating potential opportunities and concrete job offers. While you are unlikely to have a full picture of every dimension when assessing a new opportunity, this process will help you develop a general understanding of the risk level of the role you’re considering and also help you identify the “known unknowns” inherent to the new position.
As always, if you’re ready to embark on a job search and aren’t sure where to start, or if you’re using an outdated approach (if you’re starting with job boards, then the answer is yes!), Happy High Achiever is here to help. Learn more about our coaching programs or schedule a free, 30-minute strategy call.
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